As a part of its clean energy expansion initiative in Hawaii, NextEra Energy Inc. ( NEE ) announced that it has entered into a definitive agreement to acquire Hawaiian Electric Industries, Inc. ( HE ) for a total consideration of $4.3 billion.
This assumes Hawaiian Electric's debt worth $1.7 billion but excludes the company's banking subsidiary, ASB Hawaii. As a part of the deal, Hawaiian Electric will spin off ASB Hawaii into an independent publicly traded company.
Per the terms of the agreement, shareholders of Hawaiian Electric will be rewarded with combined shares and monetary payments worth $33.50 per share of Hawaiian Electric stock. This amount includes a fractional ownership of 0.2413 share of NextEra Energy per Hawaiian Electric share, a one-time cash dividend of 50 cents and finally some stake in the related spin-off.
The offered price is valued at a premium of about 21% to Hawaiian Electric's trailing 20-day volume-weighted average price as on Dec 2.
Hawaiian Electric Industries will retain its name and continue to be based in Honolulu. It was also revealed that the company's workforce will not be trimmed at least for two years after the close of the deal.
Benefits of the Deal
The management at Hawaiian Electric is optimistic about NextEra Energy's support in its endeavors to bring clean and renewable energy to the state. The former hopes to reduce customer bills in the region by as much as 20% in the next 15 years and boost the renewable energy share in the electricity mix to 65% of total power generation.
By leveraging the expertise of NextEra Energy, Hawaiian Electric strives to modernize its existing grids, incorporate more rooftop solar in Hawaii and cease to bank on imported oil.
NextEra Energy's Florida Power & Light Company is the largest electric utility in Florida and one of the largest and best-performing rate-regulated utilities in the nation. With the Hawaiian acquisition, NextEra will further expand its footprint in the regulated market.
NextEra: A Champion of Green Energy
Juno Beach, FL-based NextEra Energy has added more than 12,000 MWs of renewable power over the last decade and has 11,462 MWs of stable long-term contracted projects. Recently, the company signed contracts for the addition of 445 MW of renewable projects and hopes to add another 600 to 800 MW by the end of this year. The signed contracts include 91 MW of U.S wind, 50 MW of Canadian wind and 304 MW of U.S. solar. These projects are expected to be operational by the end of 2016.
With government mandates pushing to increase renewable generation capacity, the company's green portfolio expansion will enable it to stay ahead in the industry.
NextEra Energy currently holds a Zacks Rank #3 (Hold). Better-ranked stocks in the electric utility space include Black Hills Corporation ( BKH ) and PG&E Corporation ( PCG ). Both these stocks sport a Zacks Rank #1 (Strong Buy).
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